Debt relief

Published 1:00 am, Thursday, August 6, 2009

The horror stories coming out of the debt collection industry in recent months have shown that there are plenty of unscrupulous outfits out there ready to make people pay up by hook or, as they say, by crook.

To be sure, creditors who have money coming to them are entitled to collect it.

But consumers deserve a level playing field, where they know what they're being asked to pay for and have a reasonable chance to defend themselves against inaccurate or false claims. That isn't always the case.

And a lingering recession that has many honest people struggling to keep up with their bills makes it all the more urgent for the state Senate to pass a pair of consumer protection measures when lawmakers return to Albany today.

There are already laws on the books that deal with some of the debt collection industry's unsavory practices, but not all. As cases brought by Attorney General Andrew Cuomo in recent months have shown, there are some noteworthy gaps. Some Western New York collection firms, he says, hounded debtors at home and at work, while a Long Island process-serving firm allegedly failed to properly serve people facing debt-related lawsuits, causing tens of thousands of them to unknowingly lose court cases by default and end up with judgments they were unaware of until their bank accounts were frozen or their paychecks garnished.

Mr. Cuomo is seeking to have 100,000 judgments in cases related to the firm's work thrown out.

Consumers, though, need more than the hope that the attorney general will rescue them after the fact. They need more protection on the front end.

Several bills, already passed by the Assembly, would help keep the industry honest and tighten up the legal system. One, proposed by the Paterson administration, would restrict collection calls to 8 a.m. to 9 p.m., bar abusive conduct by debt collectors and give consumers the right to sue for violations of the law.

A second bill, proposed by Sen. Eric Schneiderman of Manhattan, would cut in half the six-year statute of limitations on consumer debt collection lawsuits and prohibit creditors from collecting on older debts. Judges would have to review applications from creditors for default judgments to make sure the claims are valid. Courts, not just debt collectors, would notify people that they are being sued.

After spending the month of June doing mostly nothing amid a power struggle, the Senate might restore a little of its own credit today by passing these consumer-friendly bills.

They would not saddle creditors with onerous requirements or give debtors an unwarranted edge. They would simply give people who owe money — and those who quite possibly do not — a fair chance when the bill collector comes beating at the door, or suing them in court.